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USDA Hemp Rule Misses Golden Opportunity

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By: Adam Trenk & Jonathan Udell, Attorneys with Rose Law Group pc’s Hemp Department

 

“I only feel angry when I see waste,” Mother Teresa once said. While fondness for cannabis sativa L. may not have been one of the Saint’s known proclivities, an analysis of the USDA’s Interim Final Rule shows it will undoubtedly cause the widespread waste she disdained. Meanwhile, Arizona and other new growing regions stand to suffer the brunt of the rule’s impact. Because the most commonly voiced complaints about the regulation concern its testing and “disposal” provisions, this article will focus on those issues.

 

Although Plant’s Legality Turns on Delta-9 THC, Rule Tests “Total THC”

 

 As a result of the 2018 Farm Bill, “hemp” is not a controlled substance in America. And whether a cannabis plant qualifies as “hemp” turns on its Delta-9 THC concentration, which must test at or below 0.3%. Hence, cannabis is not a controlled substance under federal law if its Delta-9 THC concentration is less than 0.3%.

 The hemp/marijuana distinction arises from a scientific fact, namely that Delta-9 THC is the primary psychoactive compound in cannabis. It gets users “high.” However, as the reader likely knows, cannabis contains many other compounds, including cannabinoids like THCa, which converts partially to Delta-9 THC when one applies heat. Hence, controversy has swirled for years about whether (or when) the governments should count a plant’s THCa content against its allowable Delta-9 THC content, or in other words, whether the plant’s legality should turn on its current Delta-9 THC or its potential Delta-9 THC.

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 Arizona’s current stance is not perfectly clear. Although its statutes and regulations define hemp on the basis of Delta-9 THC, one State website references Total THC Testing. Some, meanwhile, hoped for a flexible approach that would exempt growers from THCa testing if the grower could prove that its plants’ THCa would never convert to Delta-9 THC.

 Such proposals seemed to comply with federal law. After all, despite the 2018 Farm Bill’s mention of “post decarboxylation”—an apparent reference to gas chromatography testing, which heats plant samples and thus converts some THCa to Delta-9 THC—the 2018 Farm Bill also allowed “other similarly reliable methods [for testing] delta-9 tetrahydrocannabinol concentration…” If a crop’s THCa is destined to never convert to Delta-9 THC, one might argue that testing only Delta-9 THC would be more reliable than post decarboxylation, not just similarly reliable.

 Regardless, the new USDA regulations purport to end the debate. If a company grows a hemp plant and testing shows it has a Delta-9 THC concentration of 0.29% but a THCa concentration of 0.07%, State hemp plans must deem the crop noncompliant. This is because, under the new regulations, States must test for potential rather than actual Delta-9 THC, and 87.7% of a cannabis plant’s THCa can convert to Delta-9 THC. Returning to our hypothetical, then, States will need to count 87.7% of the plant’s 0.07% THCa concentration as though it were actually Delta-9 THC, and because 87.7% of 0.07 is 0.06, the State must add 0.06 to the plant’s 0.29% Delta-9 THC concentration, leading to a test result of 0.35% THC. Even if the grower can guarantee the THCa will never actually convert to Delta-9 THC, that does not matter.

 Unfortunately, USDA’s one-size-fits-all approach could carry many negative consequences. First, it could stymie research into THCa, a potentially promising and non-psychoactive compound. Additionally, although the USDA requires laboratories to report a margin of error (or “measurement of uncertainty”) and give growers the benefit of the doubt, the Total THC testing requirement will make it harder for growers in new regions to produce compliant crops and avoid seizures. As shown by a recent letter from two Senators who drafted the 2018 Farm Bill’s hemp provisions, Congress did not intend this result.

THC Remediation Ban & Forced Forfeiture Provision Would Particularly Hurt New Hemp Markets Like Arizona

 In the publication announcing its rule, USDA recognizes that no amount of carefulness can guarantee, in a new growing region, a THC concentration that rests below 0.3%. Indeed, for that reason, USDA did not include a seed certification program for its Rule, noting that “the same seeds grown in different geographical locations and growing conditions can react differently.” Additionally, the agency notes elsewhere, “hemp producers may take the necessary steps and precautions to produce hemp, such as using certified seed, using other seed that has reliably grown compliant plants in other parts of the country, or engaging in other best practices, yet still produce plants that exceed the acceptable hemp THC level.” The technology needed to determine “seed planting results in different locations is [just] not advanced…”

 Therefore, to promote fairness and encourage new growth, many States allow growers to “remediate” THC violations without totally destroying their plants. For example, in Alaska, State regulations allow certain growers to “recondition” high-THC hemp by blending it with low-THC stems and stalk. Likewise, South Carolina follows a similar approach. Some even expected scientific breakthroughs that could allow a chemical-based “spray” solution in coming years.

 However, despite the 2018 Farm Bill’s mere requirement for States to submit plans with “effective disposal” procedures, USDA’s new regulation would prohibit THC remediation techniques across-the-board and require all growers to forfeit every crop that tests over 0.3%. The decision does not result from concerns that licensed growers might divert “hot” hemp to the black market. Rather, the rule relies on a questionable legal conclusion, arising from USDA’s assumptions (1) that a failed Total THC test will show a crop is “marijuana” and (2) that the Controlled Substances Act can reach licensed hemp growers who accidentally produce marijuana.

 Both assumptions rest on shaky ground. First, USDA requires Total THC testing, not Delta-9 THC testing. Inevitably, at some point, test results will show a Delta-9 THC content below 0.3% but a Total THC content above 0.3%, even after accounting for the “measurement of uncertainty.” The government will have no evidence that the crop is legally “marijuana,” but it will still require farmers to surrender their crops anyway. Further, USDA’s second assumption ignores that the 2018 Farm Bill not only removed hemp from the Controlled Substances Act; it also gave licensed hemp growers immunity from any criminal enforcement action arising out of their accidental marijuana growth and possession.

 In the authors’ view, the ban on THC remediation is not required by law and it threatens Arizona’s hemp industry. After all, if the most diligent farmer cannot guarantee her crop will comply with THC requirements, and an accidental violation requires the crop’s total forfeiture, growing hemp becomes a gamble. Will investors continue betting on Arizona, or will they flee to developed markets with reliable seed genetics? That question remains open.

Conclusion

 Overall, the USDA Interim Final Rule is a game-changing legal development. Its implications are certainly significant, but its destiny remains in question. Will a State or company challenge USDA’s decision to neglect the typical “notice and comment” procedures that apply to federal agencies? Might a court determine that USDA violated the law in other respects, like, for example, exceeding its authority under the Farm Bill? USDA and potential challengers would have arguments to make.

 Still, these authors hope, and remain optimistic, that Arizona’s hemp industry will rally and submit detailed comments with tight argumentation, so that USDA will become aware of the potentially catastrophic consequences that its rule risks. All comments will receive the agency’s consideration so long as the agency receives it before 2020. And so, the race to avoid waste and thwart the discouragement of investment in a multi-use crop is on.

 

If you want help drafting and submitting comments on the USDA’s rule, have questions about Arizona’s Hemp or Medical Marijuana Regulations, or have any other legal needs please contact Adam Trenk, Partner at the Rose Law Group and Director of the Cannabis and Hemp Law Department at atrenk@roselawgroup.com.

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